I reviewed the data back to 1977, and I probably didn’t analyze it as well as Rich would, but I concluded that San Francisco’s housing prices are stronger than ours, except during the years of the .com bust.
San Francisco has always had greater housing appreciation than San Diego, and smaller declines, except the year 1977, and the years 2001 – 2005, where its appreciation rates lagged our city.
If you go on the premise that income should support housing, you’d expect housing prices to rise the same as income. However, SF housing prices rose in excess of income for all years from 1977, except 1982, 1984, and the period 1991-1997. From 1991 – 1995, house prices were negative, and 1996 – 1997, they rose only slightly whereas wages were growing well.
San Francisco housing prices declined only once: between 1990 and 1994, SF homes lost 12% of their value, while SD homes lost only 10%. However, SF prices rose 15% over the following 3 years, erasing the loss, while SD home prices only rose 5% over that period.
It’s interesting that during our bubble runup, starting in late 2000, we had annual appreciation of 10% to 31%, while SF had only 1/4 – 1/2 of our appreciation rates, probably a result of the .com bust. It wasn’t until the middle of 2005, that SF housing appreciation rates caught up to ours!
So while SF has been stronger than SD in the past, they’ve had periods of weakness too, and I don’t see any reason now to believe they’ll be exempt from a decline in prices.
